Overview
This lecture covers key aspects of operations planning and control, focusing on capacity planning, facility location, and layout decisions for both manufacturing and service organizations.
Capacity Planning
- Estimate likely sales by analyzing industry data and market share forecasts.
- Calculate production capacity as the maximum output possible under normal conditions.
- Accurate capacity planning ensures resources match projected demand, preventing lost sales or wasted costs.
- Continuous review is essential to optimize capacity and adjust for demand changes.
- Service businesses estimate capacity based on customer numbers, timing, service duration, and external factors.
- Demand forecasting is easier for established service companies using past data and location analysis.
Material Requirements Planning (MRP)
- MRP is a software tool using sales forecasts and lead times to calculate materials needed for production.
- The master production schedule (MPS) outlines what needs to be produced and when.
- The bill of materials lists all components required to make a product.
- MRP places orders to ensure materials arrive just-in-time for production.
Facility Location Decisions
- Facility location affects operating costs, shipping, pricing, and competitiveness.
- Proximity to raw materials, suppliers, and available labor are major factors.
- Labor costs depend on local workforce availability, cost of living, and unionization.
- Marketing factors include serving customers efficiently, distribution costs, and proximity to competitors.
- A strong local manufacturing environment provides resource availability and skilled workforce.
- Local incentives, like tax breaks and financial aid, can influence location choices.
- International sites often offer lower labor costs, fewer regulations, and access to new markets.
Facility Layout
- Facility layout should promote efficient production flow and reduce costs.
- Manufacturers may use U-shaped lines for faster movement of products and workers.
- Service organizations design layouts to enhance customer experience and streamline staff movement.
- There are three main layout types: process, product, and fixed-position.
Layout Strategies in Practice
- BK reduced restaurant size and adapted layouts for new locations as land costs rose.
- BK switched from bulky boxes to compact wrappers, saving space and enabling new location types.
- Smaller facilities allowed BK to open in varied settings like airports and schools, increasing market reach.
Key Terms & Definitions
- Capacity — Maximum goods or services a facility can produce under normal conditions.
- Continuous Review — Ongoing assessment of operations to improve efficiency.
- Material Requirements Planning (MRP) — Software system for timing material orders to meet production schedules.
- Master Production Schedule (MPS) — Detailed plan of what products will be produced and when.
- Bill of Materials — List of all component parts needed to make a product.
- Facility Layout — Arrangement of machinery, equipment, and staff in a production facility.
Action Items / Next Steps
- Review examples of MRP and make a mock master production schedule.
- Compare facility layout types and list their advantages and disadvantages.
- Prepare for quiz on factors influencing facility location decisions.